Business loans can help you get the funds you require to purchase inventory or equipment for business expansion, finance business expansion, pay employees and cover other costs. Before applying, make sure to understand how loans operate and what documentation you’ll need to your lender. Also, be aware of how long the application process can take and any fees you may incur.
Common uses for business loans
A business loan could help you cover unexpected expenses, such as a damaged office chair, or the COVID-19 pandemic. You may also need to borrow money to fund an unavoidable investment like upgrading or replacing technology, purchasing manufacturing machinery, or remodeling the store. Some lenders offer credit lines which allow you to borrow funds when needed with a predetermined maximum and interest only charged on the amount you use.
Eligibility requirements and application process
You will need to provide detailed details about your company including the official name of your business along with its tax ID and any financial records. This could include business plans including proposals, statements of profit and loss and the names and Social Security Numbers of those who own 20 to 25 percent or more of your company. Some lenders require that you be in business for at least one year. Others will accept startups or do not have time limits.
A mentor or advisor can guide you through the process of obtaining a business loan. Organizations like SCORE have a network of volunteers who act as business mentors who provide free or low-cost assistance to startups and small-sized businesses founders. You can find local chapters and connect with an advisor in person.
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